The incendiary issue of bankers' bonuses dominated exchanges at Barclays' AGM this morning, with Standard Life Investments urging its members to vote down the UK bank's 2013 pay report.

The UK bank has come under pressure over pay after it announced in February that its remuneration pool for 2013 had risen 10% to £2.4 billion, despite a 32% fall in underlying pre-tax profits. CEO Antony Jenkins declared last month that unless the firm paid competitively it risked entering "something of a death spiral".

Pockets of protest outside the event at London's Royal Festival Hall did not prevent the meeting from starting on time, with Chairman Sir David Walker wasting little time in addressing the issue of bankers' bonuses. "Bonuses up, profit down - not the headline we would have chosen," said Walker.

He described the decision on 2013 pay as a "very difficult" one but said it had been made in the interests of "damage limitation" as it fought to keep staff. Walker said the bank was being "attacked very aggressively", with particular pressure coming onto its US investment banking arm.

He pointed out, however, that bonuses actually fell 18% last year, rather than rising 10%, once the Libor-related issue that dragged down the 2012 bonus pool was excluded.

One shareholder, Phil Clark, told the Barclays board that in relation to the number of high earners at the bank, where so-called 'code staff' earning more than £1 million rose last year: "We're paying for Manchester United, but we're getting Colchester United."

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Two shareholder advisory groups, Pirc and the Local Authority Pension Fund Forum, had already advised their members to reject Barclays’ bonus plan and this morning Allison Kennedy, governance and stewardship director of Standard Life Investments, said it had instructed its members to vote against the remuneration report for 2013. She said the fund manager was "unconvinced the 2013 bonus pool was in the best interests of shareholders".

This AGM is the first test for new remuneration regulations brought in by the UK government, which allow shareholders a legally binding vote on companies’ future remuneration policy.

Sunderland, whose role as chairman of the remuneration committee also faced scrutiny from some shareholders, admitted that compensation in the finance sector was too high, but said "we cannot take the risk of acting unilaterally".

He echoed Walker on 2013 pay: "The easy option would have been to make a non-controversial decision that would have led to two things: no criticism and a significant further exodus of staff."

Speaking at his second AGM as CEO, Jenkins also touched on Barclays' investment bank, the future of which will become clearer at a strategy day planned for May 8. Jenkins said Barclays' future will be as a "strong focused international bank". He added: "The investment bank will be an important part of that mix. A strong investment bank is good for Barclays, good for you and good for Britain."

However, he said the group will only focus on businesses that deliver sufficient returns for shareholders but declined to go into detail.

*Update: This story contains an updated quote from Sir David Walker: "Bonuses up, profit down - not the headline we would have chosen."